The Hong Kong Monetary Authority (HKMA) has initiated the second phase of its digital Hong Kong dollar (e-HKD) pilot program, collaborating with 21 financial institutions on 11 distinct use cases for this central bank digital currency and tokenized deposits. In response to the project’s expanding focus, the HKMA has rebranded it as Project e-HKD+.
This new phase will introduce its own dedicated sandbox and is expected to span approximately one year.
**Central Bank Digital Currency and Tokenization**
Project e-HKD+ will center on three main themes: the settlement of tokenized assets, programmability, and offline payments. While many of the use cases remain broad and some do not directly reference the e-HKD, the HKMA has made it clear that the initiative aims to “continue to advance the technology and legal groundwork to support the potential issuance of an e-HKD.” Among the specific use cases under consideration are:
Two programmability initiatives include rewards platforms, one of which is an environmental, social, and governance (ESG) rewards platform currently being explored by Singapore’s DBS Bank. Additionally, Bank of Communications (Hong Kong) and China Mobile (Hong Kong) are investigating the use of e-HKD stored on a mobile SIM card to facilitate offline payments and transfers.
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Hong Kong’s Project Ensemble sandbox ready to test asset tokenization.
**The HKMA’s Ongoing Initiatives**
The digital Hong Kong dollar project began in 2021. The HKMA announced the second phase of the e-HKD initiative in March, welcoming applications from potential participants until May.
Source: HKMA
In addition, the HKMA revealed plans to establish the e-HKD Industry Forum. This forum will provide a platform for project participants to discuss common challenges, while working groups will focus on specific topics. The first working group will concentrate on programmability.
Furthermore, the HKMA has opened applications for its Generative AI sandbox, which will be developed in partnership with the state-owned technology firm Cyberport. This project aims to explore AI applications in areas such as risk management, anti-fraud strategies, and enhancing customer experiences in the financial sector.
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